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Full text of "ANNUAL REPORT - ONTARIO ENERGY BOARD 1965"

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SIXTH ANNUAL REPORT 



OF 



THE ONTARIO ENERGY BOARD 



YEAR ENDING DECEMBER 31, I965 



Digitized by the Internet Archive 
In 2013 



http://archive.org/details/annualreportonta1965onta 




ONTARIO 

telephone ONTARIO ENERGY BOARD 790 bay street 

365-2851 TORONTO 2 



February 10,. I966. 



Sir: 



I beg to submit the Annual Report for 
I965 of The Ontario Energy Board, and I have the 
honour to be, Sir, 

Yours faithfully, 




A, R. Crozier, 
Chairman, 



The Honourable J. R. Simonett, 

Minister of Energy and Resources Management, 

Parliament Buildings , 

Toronto, Ontario, 



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INTRODUCTION 

This report is submitted in accordance with Section 
9 of Part I of The Ontario Energy Board Act, I962+; it outlines 
the activities of the Board for the calendar year ending 
December 31, I965 . 

HEARING STATISTICS 

During the year, the Board received 12+6 applications, 
and of these 115 were heard, 12+ withdrawn and 17 will be heard 
in I966. Four applications which were received in 19o2+ were 
heard during I965. The following is a breakdown of all the 
hearings which have been held during the year: 

The Municipal Franchises Act 

Approval of terms and conditions of bylaw franchise 
agreements (section 9) 23 

Certificates of Public Convenience and Necessity 

( section 8) , 10 

The Ontario Energy Board Act, 1962+ 

Rates ( section 19) 13 

Leave to Construct pipe lines (section 37) 10 

Expropriations for pipe line rights-of-way (section 2+0). 2+0 

Exemptions (section 37) 17 

Amending Orders (section 22+) 1 

As s ignment s ( s ect ion 12 ) 1 

Authorization to inject, remove and store gas in 

designated storage areas (section 21) 1 

Deepening of existing wells in designated gas storage 

area (section 23, referred by Minister) 1 

Permission to drill wells in designated gas storage 

area ( section 23, referred by Minister) 2 

Total 119 



-2- 



GENERAL ADMINISTRATION 

In accordance with the Board T s usual practice, 
hearings were held at locations most convenient for the 
applicant and interested parties. Forty-eight hearings were 
held outside Toronto. 

The Board held twenty Board meetings, a number of 
pre-hearing meetings and interviews; visited the gas storage 
area in south-western Ontario; spent several days along the 
route of the transmission line from London to Woodstock; 
visited the DuPont of Canada plants at Brockville and Kingston 
where very large volumes of gas are utilized for a variety of 
industrial purposes; and attended the Annual Conference of 
Canadian Public Utilities Commissioners which was held in 
Newfoundland . 

Each year the Board obtains from transmission 
companies in the Province, information pertaining to the 
length and diameter of all transmission lines owned and 
operated by them in any municipality. This data, which is 
used for assessment purposes, is forwarded to the respective 
assessors of approximately 800 municipalities. 



-3- 



Throughout the last half of the year continuous 
attention was given by the Board and its staff to the prepara- 
tion of a proposed uniform system of accounting for gas 
utilities . 

LEGISLATION 

The year's work commenced under revised and up-dated 
legislation - The Ontario Energy Board Act, 196i+. This legis- 
lation was passed at the I964 Session of the Legislature and 
came into force on January 1st, I965, together with new Regula- 
tions. Among other things, the new Act clarified certain of 
the Board's powers and strengthened the sections dealing with 
gas storage provisions. 

At the I965 Session an amendment to the Act was 
passed and became law on June 22, I965. This amendment set 
out ground rules to be followed by the Board in determining 
the rate base of a gas utility and also gave the Board power 
to make regulations prescribing a uniform system of accounts 
for gas companies. 

UNIFORM SYSTEM OF ACCOUNTS 

Immediately following the enactment of enabling 
legislation in June of I965, the Ontario Energy Board took 



-i+- 



the initial steps to bring into being a uniform system of 
accounts for gas utilities. The objective is to provide the 
Board, as the price fixing authority for the gas industry, 
with reliable and readily available cost and revenue data on 
a consistent basis. The Energy Returns Officer, under the 
direction of the Board, has over the past several years been 
studying the system developed by the Canadian Gas Association 
a number of years ago and the systems prescribed for use by 
public utilities by other Canadian regulatory authorities. 

This preliminary work enabled the Board late in 
July and early in August to distribute to the gas companies 
affected a draft of the system it proposed. The Board's 
proposal does not contain anything important that cannot be 
found in one or more of the other systems studied. Nevertheless, 
and even though a large measure of uniformity already exists 
as a result of voluntary efforts within the gas industry, the 
prescribing of the proposed uniform system would involve some 
important changes from the systems presently used by gas 
companies . The Board has taken the view that each of the gas 
companies affected is entitled to a reasonable time to consider 
the effect of the proposed changes and to make representations 
to the Board as to any unnecessary hardship or expense that 
may be involved. 



-5- 



The companies were initially given until the end of 
September to submit comments and suggestions and this time was 
extended by the Board when it became clear that some of the 
companies wished to discuss their problems with the others 
before putting them before the Board. However, detailed 
discussions were held with each of the major companies before 
the end of the year and at year-end the major companies as a 
group submitted detailed counter-proposals, which are being 
carefully studied. 

Before submitting a final draft for approval by the 
Lieutenant-Governor in Council, the Board will have the advice 
and assistance of the accounting firm of McDonald, Currie &- 
Company, who have been retained as experts for that purpose. 

RATES 

No new major rate case was heard by the Board during 
the year. The rate application of Lakeland Natural Gas Limited, 
which had been commenced the previous year was dismissed by 
Order, effective December 31, I965, at the request of the 
Applicant. During the year Northern Ontario Natural Gas Company 
Limited acquired the shares of the Lakeland Company and a change 
in management followed. The new management was not wholly 
satisfied with the case prepared by the old and therefore, with 



-6- 



the permission of the Board, the old proceeding was terminated 
and a new application was filed. The hearing will be held 
early in 1966. 

The Board heard thirteen rate applications, some 
of which were for very large volumes of int erruptible or firm 
gas for industrial use. 

For the first time, the Board fixed the rates and 
other charges for the wholesale sale of gas and for transmission 
and storage. These were fixed on an interim basis for Union 
Gas Company of Canada, Limited, and Tecumseh Gas Storage Limited, 
pending final disposition of the applications by public hearing 
early in I966. 

It is expected that public rate hearings will be 
held in I966 for Provincial Gas Company Limited and Grimsby 
Natural Gas Company Limited, and the rates of other companies 
may also be reviewed during I966. 

APPROVALS - CERTIFICATES 

Distribution of natural gas was introduced into 
twelve municipalities in the Province throughout the year, 
and in a number of others the bylaw franchise agreements were 
renewed. 



-7- 



CONSTRUCTION OF PIPE LINES 

The major pipe line project in I965 was the construc- 
tion of the second section of the Union Gas Company's 34" Dawn- 
Oakville pipe line. This section, approximately 30 miles in 
length, between London and Woodstock parallels the Union Gas 
Company's 26" line which was constructed in 1957. The line 
is required to meet increased demands during winter peak periods 
and to transmit gas to and from storage in Lambton County for 
Union Gas Company and other Ontario gas utilities. 

Other pipe line construction approved during the 
year included a looping of the Fort William-Port Arthur branch 
line by Twin City Gas Company, laterals to the Village of 
Watford and to the Canadian Industries Limited plant in Lambton 
County by Union Gas Company. 

Other pipe line construction included short laterals, 
the replacement of deteriorated pipe lines and the re-location 
of existing lines to accommodate road and highway construction 
and public works . 

EXPROPRIATIONS 

The Board held forty public hearings for expropriation 
of pipe line easements. Thirty-five of these proceedings were 



-3- 



for easements along the route of Union Gas Company's 3 V pipe 
line between London and Woodstock. As in the previous year, 
the Government appointed special inspectors to act as liaison 
between landowners and the pipe line company to ensure that 
terms and conditions of the Board's Orders granting authority 
to expropriate were complied with by the company constructing 
the line . 

It should be noted that in pipe line expropriations 
the Board is not empowered to deal with any compensation matters 
These may be referred to a Board of Arbitration appointed by 
the Minister under The Ontario Energy Board Act. For the first 
time, the Government provided further assistance to landowners 
by appointing a Board of Negotiation under the authority of 
The Expropriation Procedures Act. This Board, at the request 
of either a landowner or pipe line company, will assist in 
negotiations between the two parties. If settlement can not 
be reached in this manner, it may be referred to the Board of 
Arbitration by either party. It is not compulsory that such 
matters be brought before the Negotiation Board before going 
to arbitration but this procedure does make available an inter- 
mediary through which settlement may be reached without going 
to the more formal Board of Arbitration. 



-9- 



A UTHORIZATIQN TO STORE GAS 

Following a public hearing, the Board granted to 
The Consumers' Gas Company the right to inject gas into, store 
gas in and remove gas from an area in the Township of Humb erst one 
in Welland County comprising approximately 17&2 acres, known 
as the Crowland Pool. This area had been set apart by regulation 
the previous year as a designated gas storage area and is now 
being used to store gas for emergency requirements and peak 
periods for The Consumers' Gas Company and its subsidiary, 
Provincial Natural Gas Company Limited. 

DEEPENING AND DRILLING WELLS IN DESIGNATED AREAS 

On reference by the Minister of Energy and Resources 
Management, the Board heard applications to deepen existing 
wells and to drill new wells in the Seckerton and Corunna 
designated gas storage areas. Following public hearings, the 
Board recommended that the permits applied for should issue. 
An application to drill in the Zone Pool has been referred to 
the Board and will be heard in I966. The status of the Zone 
Pool is that it has been designated as a gas storage area but 
no Order authorizing storage has yet been made. The Board 
understands that an application for such authorization is in 
the course of preparation. 



-10- 



ASSIGNMENTS 

On April 1, 19&5 Union Gas Company of Canada, Limited 
consolidated its property and operations with those of its 
wholly-owned subsidiary, Ontario Natural Gas Storage and Pipelines 
Limited. The Board, following a public hearing granted authority 
for the assignment of all leave to construct orders and expro- 
priation orders from Ontario Natural to Union Gas. 

MISCELLANEOUS 

Throughout the year, the Board continued to study 
and keep under review matters related to the oil and gas 
industry over which the Province of Ontario has jurisdiction. 
Board representatives attended two hearings before the National 
Energy Board where the interests of the Province were involved. 

During the year arrangements were made to provide 
for additional large volumes of gas to meet the increase in 
long term requirements of the Province. Northern and Central 
Gas Company Limited (formerly Northern Ontario Natural Gas 
Company Limited), Lakeland Natural Gas Company, Union Gas 
Company of Canada, Limited and The Consumers' Gas Company all 
entered into important contracts with Trans-Canada Pipe Lines 
Limited for this purpose. The existing pipe line of Trans-Canada 
is operating close to capacity but a new 36" pipe line is scheduled 



.11- 



to be built in I966-67 through the United States from the U.S.- 
Manitoba border to a point south of Sarnia, Ontario, by Great 
Lakes Transmission Company, a joint venture of Trans -Canada 
Pipe Lines Limited and the American Natural Gas Company of 
Detroit. This important international project requires approval 
by the Federal Power Commission and the National Energy Board. 

PERSONNEL 

The membership of the Board was augmented on May 31 , 
I965, by the appointment of Mr. A. B. Jackson as Vice-Chairman, 
and now consists of Mr. A. R. Crozier as Chairman and Messrs. 
A. B. Jackson, D. M. Treadgold, E. A. Allcut and L. R. MacTavish. 
All but the Chairman and Vice-Chairman are part-time members. 
An Audit Assistant was added to the staff of the Board late in 
the year. 




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